Justin Barclay and I had fun on the radio yesterday discussing the unintended consequences of ObamaCare on the Jay Severin show:
TAX TIME! Maximize Your Tax Deductions for 2012
Here are a couple little known tips that could significantly reduce your taxes for 2012:
1. If you are a small business owner with less than 25 full-time employees and you are paying health insurance premiums for your employees, you could be eligible for a TAX CREDIT of up to 35% of the employer portion of premiums paid in 2012.
2. If you were covered by an HSA qualified High Deductible Health Plan (HDHP) on or before December 1st, 2012 then you have until you file your taxes (or April 15th 2013) to contribute to your HSA and get a 2012 tax deduction.
2012 Contribution limits:
Single – $3100
Family – $6250
Catch up contribution (age 55 or older) $1000 per person*
2013 Contribution limits:
Single – $3250
Family – $6450
Catch up contribution (age 55 or older) $1000 per person*
*If both are 55+ then both have to open HSA accounts for both to participate in catch up contribution
These limits are also stated on the U.S. Department of Treasury website.
These maximum contributions will not be pro-rated if your HSA qualified health insurance plan (HDHP) was either in force all 12 months of 2012 OR if it was in force by December 1st of 2012 AND remains in force all 2013.
Your tax deduction is based on how much you DEPOSIT into your HSA, not how much you spend.
You do not have to itemize to get the tax deduction.
You do NOT have to pay your eligible expenses out of your HSA.
You are required to keep receipts of your eligible expenses in case the IRS audits you. You can choose to reimburse yourself at a later date up to the medical receipts you have accumulated without being subject to 20% penalty or taxable income.
The triple-tax advantages (tax deductible deposits, tax free interest earned, and tax free withdraws for eligible medical expenses) only available with HSAs make them an important tax planning tool that is unmatched when used properly.
Other statistics show that nearly half of the 14 million Americans covered by the required HDHP insurance plans have not established their HSA account, and therefore are not participating in the tax savings they offer. Although OFM Benefits is one of the nation’s premier HSA focused insurance agencies, there are probably some of you that have procrastinated setting up your account.
As many Americans are facing huge health insurance premium increases and revenue decreases, HSA qualified plans are becoming even more popular. The average household pays nearly $16,000 per year for health insurance premiums! We feel HSA qualified plans offer the best value in healthcare today.
If you are self employed or a business owner and would like to receive the premium savings and tax deductions only available with HSAs, please visit www.missionHSA.com
N. Scott Borden
Dave Ramsey’s Endorsed Local Provider (ELP)
Health Insurance Director
OFM Benefits Consulting, LLC
6400 Glenwood, Suite 307
Overland Park, KS 66202
913-980-4694 mobile
913-432-2061 fax
http://www.missionHSA.com
ObamaCare vs. Health Savings Accounts
(Updated 2013 post-election)
The Patient Protection and Affordable Care Act (PPACA, ObamaCare) has been ruled constitutional. And Obama has been re-elected so there is no chance of repeal. What does all this mean for Health Savings Accounts?
HSA qualified High Deductible Health Plans (HDHP) are the fastest growing segment in health insurance today. Over 15 million people have over $17 billion saved in their HSAs. Since unspent HSA funds roll over from year to year, HSA owners have a vested interest in not spending their own healthcare dollars. The more common co-pay plans insulate people from costs which often results in over-utilization. HSAs change this behavior. This is why they are commonly referred as ‘Consumer Driven Healthcare’ plans.
There are some portions of the law that directly affect HSAs. There are several other rules that we have to speculate how they will be implemented. Let’s begin with the direct HSA rulings:
1. The penalty for ineligible withdrawals from an HSA has been increased from 10% to 20%
2. All over-the-counter medications now require a written prescription
That’s it. As long as you keep proper records verifying your HSA withdrawals were for eligible medical expenses (see publication 502) and obtain a written prescription for your allergy medication, pain relievers, etc. then you will not be subject to any penalty at all.
Now for the provisions that will impact HSAs indirectly:
1. INDIVIDUAL MANDATE (2014)
Since ObamaCare requires people to purchase health insurance, most people who are currently uninsured will look for the lowest cost option available. HSA qualified insurance policies are not allowed to have co-pays and have minimum deductibles of $1250 for self-only coverage and $2500 for families which makes them more affordable. This could dramatically increase how many HSA qualified plans are purchased.
2. STATE EXCHANGES (2014)
Exchanges are online portals where people can enroll in health insurance plans and potentially receive government subsidies based on income (up to 400% poverty level). Since HHS Secretary Kathleen Sebelius continues to interpret how these exchanges are to be implemented, this one is far from finalized. Companies will be allowed to offer up to 4 plans on the exchanges (bronze, silver, gold, platinum) each with mandated “Essential Health Benefits”. All exchange qualified small group plans have a maximum deductible of $2,000 for self-only coverage and $4,000 for families. This type of a restriction will increase the cost of HSA qualified health insurance plans over the larger deductibles available today (up to $6,050 for self-only coverage and up to $12,100 for families). But they should still offer a substantial premium savings over co-pay plans.
3. MEDICAL LOSS RATIO (2011)
ObamaCare requires Health insurance companies to pay at least 80% of all collected individual / small group premiums and at least 85% of all large group premiums out in benefits and claims. HSA qualified insurance plans typically cost less while still having similar fixed costs (insurance company marketing, underwriting, and claims processing) which makes MLR a difficult provision for them to comply with. This could limit the number of insurance companies that offer HSA qualified plans on the exchanges. However the elimination of underwriting costs (all plans will be guaranteed issue) and the reduction in marketing costs for the insurance companies once most insurance agents are replaced by exchanges should make all plans MLR friendly by 2014.
Unless Kathleen Sebelius makes an unexpected ruling, HSAs appear to not only survive ObamaCare, but potentially thrive.
So… Health Savings Accounts appear to have a bright future with or without ObamaCare.
Original pre-election version as published in Ingram’s Magazine September 2012
By the HSA GUY, Scott Borden
Host of “Insurance Talk with Scott & Mike” Saturday 7-8 AM on www.KCMOtalkradio.com
www.missionHSA.com
913-980-4694
ObamaCare has been ruled Constitutional… NOW WHAT?
Regardless of how SCOTUS arrived at its decision, ObamaCare (Patient Protection & Affordable Care Act) is now the law of the land.
I was interviewed this morning on The KCMO Morning Show with Greg Knapp. He asked me what ObamaCare will do to our current insurance plans:
Click HERE to listen to the interview
Greg Knapp and Scott Borden
We discussed several of the mandates that will raise health insurance premiums such as guaranteed issue and the rarely mentioned time bomb known as the 3:1 Ratio. If only young people understood how ObamaCare will significantly increase their health insurance premiums, maybe they won’t be as eager to support Obama like 68% of them did in ’08.
There is still a chance to overturn the largest tax increase and re-distribution legislation in the history of our country. Your chance will come November 6th.
Democrats vote November 7th.
(UPDATE: Read ObamaCare vs. Health Savings Accounts article published in Ingram’s Magazine September, 2012)
More Employers Steer Towards Consumer-Driven Health Plans
Renewing your health insurance used to be easy. Now it seems to take all year. Your employees seem to be healthy, but your renewal rates disagree. You contact your old consulting firm. Utilization is too high…again. Emergency room visits are too frequent…again. Generic prescription substitution is too low…again. You are told to increase co-pays and raise deductibles to create the necessary “steerage” to help hold down your health care costs. The result? Double-digit premium increases…again. You are reminded of the definition of insanity: doing the same thing over and over again expecting different results.
What other options are there?
By now you’ve heard of “consumer-driven” health care plans. At this time there are two versions showing promise, Health Reimbursement Arrangements (HRA) and Health Savings Accounts (HSA). They are designed to lower health insurance costs by engaging employees to take a vested interest in their own health care expenses.
There are significant differences between how these plans work. The employer is the owner of the HRA. The more successful HRA plans are designed to allow a portion of the unspent accounts to roll over from year to year as an incentive to the employee not to spend them. There are no requirements for which type of insurance you use with an HRA. The money that is not spent stays with the employer if an employee leaves.
The employee is the owner of their HSA. Both the employer and the employee can fund this account. HSA funds can be used to help offset all medically related expenses including a tremendous number of things that do not count towards the insurance deductible such as dental, vision, and even some over-the-counter medications. In order to establish an HSA the employee must be covered exclusively by a High Deductible Health Plan (HDHP). The federal government has placed specific guidelines for deductibles and out-of-pocket maximums for these plans to be qualified. Since these plans have a higher deductible than most co-pay plans there is usually a significant premium savings. The concept is to place the premium savings in the tax deductible HSA account and use these dollars to pay your smaller expenses at the insurance company’s negotiated PPO discount while maintaining the insurance plan for major expenses. There are now many examples of the premium savings being large enough to cover most or all of the HDHP deductible!
The HSA accounts can be opened through local banks and credit unions. As long as your HSA qualified health insurance plan is effective by December 1st 2012 you have until April 15th of the following year to deposit up to $3,100 individual or $6,250 family into an HSA account for 2012 and $3,250 individual or $6,450 family for 2013. If you are 55 or over then you can deposit an additional $1000. Account balances roll over year to year. HSAs are the only products that offer triple tax advantages; tax-deductible deposits, tax-free interest earned, and tax-free withdrawals as long as they are spent on qualified medical expenses. Since the employees own their HSA account there is a significant difference in how this money is spent. Imagine your employees all having a vested interest in not spending their health care dollars. This is why self-funded plans tend to benefit most.
The city of Iola, KS is a perfect example. They switched all of their employees to an HSA plan in 2004. Their utilization has decreased substantially which has allowed the city to deposit half of the employee’s individual deductible into their HSA account each year. Employees have embraced the new plan and are seeing their HSA not as an entitlement to be spent but as a retirement account that should be saved whenever possible. The city now has their health insurance costs in check.
The new generation of consultants will need to be focused on educating businesses and their employees offering workshops and educational tools to help employees understand how these plans work.
Otherwise you can keep your current consultant and accept your insurance premium increase… again!
(Originally printed in the Kansas City Star July 17, 2007)
TAX TIME! Maximize your Tax Deductions for 2011
Click HERE for latest update
Since this blog is dedicated to offering the most up-to-date Health Savings Account information, we want to make sure you maximize your HSA for 2011. Remember, if you were covered by an HSA qualified High Deductible Health Plan (HDHP) on or before December 1st, 2011 then you have until you file your taxes (or April 17th 2012) to finish up your 2011 contributions and get a 2011 tax deduction.
2011 Contribution limits:
Single – $3050
Family – $6150
Catch up contribution (age 55 or older) $1000 per person*
2012 Contribution limits:
Single – $3100
Family – $6250
Catch up contribution (age 55 or older) $1000 per person*
*If both are 55+ then both have to open HSA accounts for both to participate in catch up contribution
These limits are also stated on the U.S. Department of Treasury website.
These maximum contributions will not be pro-rated if your HSA qualified health insurance plan (HDHP) was either in force all 12 months of 2011 OR if it was in force by December 1st of 2011 AND remains in force all 2012.
Your tax deduction is based on how much you DEPOSIT into your HSA, not how much you spend.
You do not have to itemize to get the tax deduction.
You do NOT have to pay your eligible expenses out of your HSA.
You are required to keep receipts of your eligible expenses in case the IRS audits you. You can choose to reimburse yourself at a later date up to the medical receipts you have accumulated without being subject to 20% penalty or taxable income.
The triple-tax advantages (tax deductible deposits, tax free interest earned, and tax free withdraws for eligible medical expenses) only available with HSAs make them an important tax planning tool that is unmatched when used properly.
Other statistics show that nearly half of the 11 million Americans covered by the required HDHP insurance plans have not established their HSA account, and therefore are not participating in the tax savings they offer. Although OFM Benefits is one of the nation’s premier HSA focused insurance agencies, there are probably some of you that have procrastinated setting up your account.
OFM is proud to recommend HSA Bank because of their great combination of low fees, competitive interest rates, and a large number of investment options. With over 400,000 HSA accounts and over $1 billion in HSA deposits, HSA Bank has established themselves as one of the nations leading HSA administrators. They also recently eliminated all setup fees.
As many Americans are facing huge health insurance premium increases and revenue decreases, HSA qualified plans are becoming even more popular. The average household pays over $15,000 per year for health insurance premiums! We feel HSA qualified plans offer the best value in healthcare today.
If you are self employed or a business owner and would like to receive the premium savings and tax deductions only available with HSAs, please visit www.missionHSA.com
Scott Borden
Host of “Insurance Talk with Scott & Mike” Saturday mornings 7-8 on KCMO Talk Radio 710
OFM Benefits Consulting, LLC
6400 Glenwood, Suite 307
Overland Park, KS 66202
913-432-2732
913-432-2061 fax
Set up your HSA today!
So you finally switched to an HSA qualified High Deductible Health Plan (HDHP). You love the lower health insurance premiums these plans offer. However, life happened and you didn’t get around to setting up your Health Savings Account (HSA). Now you are sitting there with a medical bill you need to pay, and you remember the triple tax advantaged HSA account that allows you to pay for HSA qualified eligible medical expenses with tax deductible money.
Unfortunately the HSA account needed to be established BEFORE the expense was incurred to be an HSA eligible expense.
For all you procrastinators out there, here’s my advice… take 5 minutes and set up your HSA with HSA Bank. They have no setup fees and offer very competitive interest rates along with thousands of investment options.
HSA Bank Home Office
HSA Bank was one of the very first financial institutions that recognized the importance of Consumer Driven Health Plans. They opened their first Medical Savings Account in 1997. They currently have nearly 400,000 HSA accounts holding over $1 billion in HSA deposits.
Nobody knows for sure how many people are eligible to set up an HSA and have yet to do so. It only takes a few minutes and it could save you a lot of money on your next tax return.
We had the privilege of interviewing several HSA Bank executives recently on Insurance Talk.
September 3, 2011 Dean Mason, CEO
September 10, 2011 Phil Hartsig, Regional Vice President
September 17, 2011 Itamar Romanini, Senior Vice President of Business Development
December
What Is An HSA?
A Health Savings Account (HSA) is a tax-deductible account to which you can contribute to save for future medical expenses or to pay for any day-to-day, qualified medical expenses permitted under federal tax law...[More]
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